2023-11-08 13:54:32
Also known as tailored funds, the exclusive backgrounds are an attractive option for high-income investors seeking significant returns on their investments.
This modality is characterized by its exclusivity, because its access is restricted to a limited number of people, generally with considerable capital to make larger contributions.
Because of this peculiarity, it becomes a product that seeks more attractive returns than other generalist options on the market and available to the general public.
Exclusive funds are regulated, following what happens with other investments. To operate, they require registration with the Securities and Exchange Commission (CVM).
As established in CVM Instruction 554access to this product is restricted to qualified investors and/or professionals.
In this article, you will understand, in detail:
- What are exclusive investment funds
- Who can invest
- How they work
- Taxation
- Advantages and disadvantages
What are exclusive funds?
In general, exclusive backgrounds are those that have only one shareholder, that is, a single investor, who receives the necessary attention from the manager in the composition and management of the portfolio.
It is a product aimed at qualified and/or professional investors.
As you can imagine, the selection of assets with such personalization seeks more significant results, taking into account the characteristics and particularities of just one investor, who bears the costs of maintaining this professional support. premium.
By serving a specific group of people, exclusive funds have another specificity, in addition to the search for higher returns.
They are considered an effective strategy for asset shielding — which consists of a set of measures that aim to protect and preserve the assets that belong to a specific individual.
In other words, they act as a shield for the personal assets of businesspeople or high-ranking executives, for example, preventing financial or legal problems in the company from affecting private assets.
Who can invest?
CVM Instruction 554 clarifies this doubt in its article 9.º-B. Among the specifications are:
- Individuals or legal entities with more than R$10 million in investments financial and that certify in writing the status of qualified investor;
- Professional approved in qualification exams or with certifications approved by the CVM itself, guaranteeing registration as an independent agent, portfolio administrator, real estate analyst and consultant, in relation to its own resources;
- investment clubs with at least one qualified investor shareholder managing the portfolio.
These criteria aim to ensure that investors accessing exclusive funds have a significant level of financial experience and knowledge or substantial wealththus ensuring that they understand and can deal with the associated risks.
How do exclusive funds work?
Exclusive funds act in a similar way to traditional products, but with some important distinctions.
Access restriction
As mentioned previously, these funds have strict access criteria. Typically, only high-income investors participate.
Personalized service
The managers of these funds outline the investment strategy according to the specific objectives of the investor, who in turn has greater control over the investments made.
High diversification
Exclusive funds often invest in diverse assets, including stocks, bonds, real estate, alternative investments and even private ventures. This diversification is one of the main strategies for reducing risks and maximizing returns.
Greater complexity
Exclusive funds generally employ more complex strategies such as arbitrage, investing in startups, high-value real estate and financial derivatives.
This can result in significantly higher returns, but it also carries a higher level of risk.
Fees
Customizing the service comes at a cost, of course. As a result, management and performance fees tend to be slightly higher compared to traditional funds.
Managers charge a percentage of assets under management and, in some cases, a percentage of profits generated.
Rescue
Redemption deadlines tend to be longer, with a lower liquidity. Therefore, the assets allocated to this fund are not immediately available in case of need.
Closer relationship with managers
Investors in exclusive funds often have the opportunity to interact directly with managers, which provides deeper insight into the strategies being worked on.
Special features of exclusive funds
Even with a structure similar to that of generalists, exclusive funds bring the personalization of the service as a great asset for the investor.
The differentiated experience is directly related to the proximity to the professional who will work in management. This will make it easier to achieve your financial goals.
This way, the returns are more significant, easily offsetting the costs of relying on a premium service.
Another particularity is the possibility of the exclusive fund being open or closed, with this differentiation reflected in taxation.
In the first case, shares cannot be transferred. Despite this, it is possible to make redemptions at any time. The closed-end fund works the opposite. Furthermore, it has a closing date, but with the possibility of extension.
How is the taxation of an exclusive fund?
Following a regressive tableexclusive funds are subject to Income Tax (IR) on income, in the same way as other investments.
The rate starts at 22.5% and can reach 15% with an increase in the period for investing resources. In short: the longer the money is invested, the lower the amount paid.
As these funds are normally used in long-term strategies, it is common for the incidence to be as low as possible.
Here an important point deserves to be highlighted. Open-ended funds need to advance IR twice a year (an event called come-quotas). This occurs in the months of May and November.
Still regarding taxation, it is necessary to mention the Provisional Measure (MP) 1,184, from August 2023, which deals with the topic here in Brazil. In general terms, closed-end funds will also be subject to the IR rate twice a year, like others, if the measure is approved.
Advantages and disadvantages
Now that we have learned what exclusive funds, regulation and even taxation are, it is important to understand the advantages and also the disadvantages.
Benefits
- Tax optimization: without the incidence of IR on the fund’s movements, the manager buys and sells assets over the years without paying taxes.
- IOF exemption: movements in the fund’s portfolio are exempt from Tax on Financial Operations (IOF).
- Succession planning made easy: Creating a strategy for the transition of values between generations is simpler, maintaining the use of shares even when making the donation.
- Diversification: They offer diversification of assets and risks without the need to have accounts at several financial institutions.
- Simplification: Due to the exclusive nature of the fund, the shareholder can monitor profitability more easily, also counting on the support of the manager to understand every detail.
Disadvantages
- Incompatibility with IR-exempt products: IR-free products are not recommended for these funds. Therefore, options such as LCA and LCI need to be crossed off the list.
- Fixed costs borne by the investor: when choosing to invest through an exclusive fund, the investor needs to take into account the payment of regulatory fees, as well as other expenses incurred to maintain the service.
Therefore, it is possible to conclude that, although exclusive funds offer significant advantages, such as tax optimization and flexibility in asset management, they also have limitations in terms of access and compatibility with certain types of investments.
Wealth Management and the Warren Approach
Perfect, we already know the particularities of exclusive funds. But, in practice, how to access them?
Wealth Management is a wealth management service that involves consultancy, investment planning and management, as well as succession planning.
Strategies included in this service include the creation and management of exclusive funds.
Check out the benefits offered by Warren to high-income investors here.
Conclusions
Exclusive funds are attractive to investors who want more personalized treatment, greater return potential and who have a high-risk investment profile.
However, it is essential to remember that, due to the complex nature of these funds, it is crucial that participants understand the strategies and risks involved before venturing into this segment.
For investors who fit the required profile and want to maximize their returns, exclusive funds are an attractive option. They offer security, asset protection, tax benefits and allow for effective succession planning.
The customization of this type of investment makes exclusive funds one of the best ways for professional investors with substantial resources to obtain solid and secure financial returns.
Still, it is essential to enlist the guidance of experienced financial professionals and fully understand the risks associated with these investment vehicles.
The modality is advantageous, but requires significant initial investment. Initial costs can be burdensome for those without substantial financial resources and professional knowledge in the field.
Therefore, this option is more viable for high net worth investors and experienced professionals who can afford these expenses.
Do you want to know more regarding exclusive funds and what they can do for your wealth?
Talk to our experts.
Continue reading:
1699517721
#work #advantages #disadvantages
